The legal system of Bulgaria is
in the process of been aligned in full, with that of the
European Union, in view of the expected membership of the
country to the Union. Besides, cutting off corners, very
common in the communist legislation, the legal system under
introduction takes full care of the rights of the individual,
protects the citizen against the supremacy of the state
institutions and in general promotes, natural justice, freedom
and protects in full the right of ownership.
In particular, the laws
relating directly or indirectly to the question of "ownership"
provide for a number of mechanisms, designed to fully
guarantee and protect the buyer of immovable and movable
property.
PURCHASE OF REAL ESTATE BY
NON- BULGARIANS: With regard to the question of "buying
and owning" immovable property or real estate by "foreign
citizens" the law as it stands today provides:
- Any foreign citizen can legally own a building
(apartment - villa - cottage - mezonette), without any
conditions attached to it, but in order to own the land on
which the building is build, the permission of the Council
of Ministers is needed.
- In the meantime there are no restrictions of ownership
for "legal entities" meaning companies, legally registered
in Bulgaria and owned wholly or partly by foreign citizens.
- Foreigners can not also buy agricultural land at
present! This law is under review and it is bound to be
amended within the spirit of the European Union directives,
in order to allow the purchase and ownership of agricultural
land by EU citizens. It is stressed here that "legal
entities" registered legally in Bulgaria and owned wholly by
foreigners, can purchase and own agricultural land, without
any restrictions.
- Most foreign buyers, even EU citizens, choose to
register a "legal entity" mostly owned by the buyer or the
buyer and his wife and register the legal entity, as the
legal owner. Besides the low cost of registering such an
entity (it costs between €500 to €600) and the short time
needed for the registration, there are some interesting tax
advantages in doing so, which will be explained further on.
TITLE DEED /OWNERSHIP/ CONTRACTUAL SAFETY
Any contract or legal
transaction has full validity in court, once it has been
endorsed and registered by a Public Notary (Commissioner for
Oaths). The reason been that unless the contract is in full
accordance with provisions of the laws and provides for a
lawful deed, the Public Notary will not give his/her consent
and obviously, will not register such a deed in the General
Registry. Once though the legal deed (contract of sale
-agreement-transfer of ownership) is registered and endorsed
by the Public Notary, then is fully valid and legally binding.
It is though important to point out that any agreement made
and signed by a number of parties, this is valid and binding
at any court of law!
The Public Notary always issues
Title Deeds, they are called "Notarial Acts" or simply "Acts"
and are obligatorily registered at the regional court of
justice! A Notarial Act is valid, only when it bears the
signature and stamp of a regional judge. The same Acts as
every other legal deed, are registered in Central National
Registry, which is accessible by all Public Notaries,
solicitors and court servants.
The Notarial Act is written on
the basis of the signed sales contract and contains all the
characteristics of the property (address, size, boundaries,
and status), the name/s of the previous owners and that of the
new and in general everything required by law in order to
recognize the ownership. In the case where the property has
been mortgaged, sold to an other party or for any reason has
legal holds, this will appear automatically once the property
register number is entered into the computers of the Central
National Registry.
In the case where the
contract signed refers to a property "to be build",
buyers are advised to be extremely careful and to seek expert
legal advise. In this case though the contract is register
with the Central National Registry, it is considered by the
court as "a civil dispute". The reason been that the subject
of the contract (the apartment - villa - cottage etc) is not
in fact in existence and the Sellers undertaking is to build
in accordance with the provisions of the contract. In
order to offer a straightforward deal to our buyers and
actively safeguard their interests, we have devised the
following formula, which provides for the absolute
safeguarding of parties, buyer and seller:
- On the signing of the contract of sale and the payment
of deposit (normally is 33%), we transfer the ownership of
the building plot on which the property will be build on the
name of the buyer. In the case where the property is an
apartment, we transfer the ownership of that part of the
building plot, which corresponds to the apartment in
question.
- Upon the commencement of construction, the buyer is
obliged to deposit 33% of the contract price, in an
earmarked Bank Deposit Account, with irrevocable
instructions that the sum will be released to the order and
benefit of the Seller (Developer), upon the presentation of
a Surveyors Certificate that the construction works provided
by the contract as "the first phase" has been completed. The
same method apply with the "second phase", the buyer upon
the commencement of the second phase, deposits the remaining
34%, which is payable to the Seller (Developer) upon the
Surveyors Certificate that the building is ready and
constructed in accordance with the provisions of the
contract.
- The above method not only offers full security to the
buyer, but additionally the money paid is in fact invested
in the property already owned by him/her. An other serious
safeguarding offered to the buyer, is the fact that the
building permission and all other licenses to this respect,
are issued on his name and upon the completion of the
construction he/she, becomes automatically the owner
of the property build on the land.
RESIDENCY - WORK PERMIT - TEMPORARY RESIDENCE:
The laws of Bulgaria are very
liberal and allow a lot of possibilities, to those wishing to
live and work in the country. Though there is a procedure to
be followed, this takes only a few days and will not cost you
more than a couple of hundred euros. In particular, a visitor
to Bulgaria, staying over 15 days (not tourists on organized
tours) is required by law, to register with Aliens Department
of the Ministry of Interior or the local Police Station. This
is obvious common in every country and is done for security
purposes. For foreigners, wishing to stay for longer
periods, the law provides:
- Owners, Proprietors and staff of foreign owned companies
registered legally in Bulgaria, are entitled to a "temporary
residents status" and work permit, valid for 12 months and
renewable, every 12 months for an unlimited period of time.
In this case an application is needed, to the Aliens
Department of the Ministry of Interior or the local police
station. Within 15 days, the authorities will issue the
required permit, which has the form of a "temporary identity
card". It is naturally required for the Company employer to
prove that the applicant has the means to live and social
security installments are paid.
- Foreigners residing temporarily but legally in Bulgaria,
for a period over five years, have the choice to apply and
be granted a "Permanent Residence Permit".
- Owners of property, legally registered can apply for a
12-month residence permit, which is again renewable every 12
months. The only condition attached is that they have to
prove that they live on " imported means" or " locally
earned means, which have been cleared by the Tax
Authorities". On completing the 5-year limit of living in
Bulgaria, legally, the owners of property can apply for
"Permanent Residence Permit" or even Bulgarian citizenship.
- With regard to EU citizens, it is expected that the
legislation due to be passed by the Bulgarian Parliament,
will unconditionally allow EU citizens to reside and work in
the country without any further permit, except the normal
"address registration".
ADDITIONAL COSTS (EXCLUDING PURCHASE PRICE):
As the situation stands today,
Bulgaria is probably the cheapest country in Europe, when it
comes to transferring and owning a property! We give you
below, a detailed estimate of what you will be expected to pay
in the form of professional charges and taxes, when buying
property:
- Legal fees: Receiving full legal advise and drafting of
the sales contract is about £412.
- Stamp Duty/Transfer Fee: Both combined together are paid
to the Public Notary at the time of transferring and
registering the property and it is equal to 3.6% of the
"Declared Sales Price" or of the "evaluation of the tax
authorities", whichever is the highest.
- For example, you buy a property for £20.000, the
additional costs will be as follows:
Legal fees
(optional, as the actual conveyancing is done by the Public
Notary): £412
Stamp Duty/ Transfer Fee: 3.6% x 20.000 = £720
Total: £1132 OR 4.1% maximum
Annual Running Costs (based on a £20.000 property):
1-
Immovable property (based on the tax department evaluation
0.20%) Maximum £40 2- Municipal taxes (once again
based on the tax evaluation 0.20%) Maximum £40
3-
Insurance (all risks, including theft) @ 0.45%) Maximum £90
Total Maximum:
£170.00
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